Incoterms Definitions Part 3: DAT, DAP, DDP
Today’s Incoterms are brought to you by the letter D. D is for Delivery.
Too Sesame Street? Then let’s get right into the final installment of the Incoterms explanation blog series.
I might miss writing about these little tigers.
Here is where the simplification of 2010 really comes into play. The D group describes different methods of delivery of goods and represents the arrangements with the maximum amount of responsibility (both for costs and risks) to the seller, not the buyer. There used to be 5 acronyms in the D group total. Now there are only 3.
Previously, there were 3 terms used to indicate where goods were to be delivered, i.e. DAF, “Delivered at Frontier”; DES, “Delivered Ex Ship”; DEQ, “Delivered at Quay”. Now those 3 terms have been simplified.
The delivery location is now identified simply as DAT or DAP – “Delivered at Terminal” or “Delivered at Place”. The reasoning is that the increase in point-to-point sales and containerization made the other terms obsolete.
Lastly, the term DDUP – “Delivery Duty Unpaid” – has been eliminated completely. I guess there’s no getting out of paying duty which leaves the term DDP – “Delivery Duty Paid”.
Look out because plenty of websites are still sporting the old terms and presumably still wresting with the ambiguities caused by the old terms. You want to be careful because these ambiguities can muddle your international shipping agreement and cost you more than you calculated!
Now for the final Incoterms and their definitions.
- DAT – Delivered at Terminal
Definition: This term means that the seller covers all the costs of transport (export fees, carriage, insurance, and destination port charges) and assumes all risk until after the goods are unloaded at the terminal. “Terminal” includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal. The buyer covers the cost of transporting the goods from the terminal or port to final destination and pays the import duty/taxes/customs costs.
Note: With this arrangement, the seller assumes a large portion of the risks and costs of transport. This term applies to any mode of transport.
- DAP – Delivered at Place
Definition: This term means that the seller pays all the costs of transportation (export fees, carriage, insurance, and destination port charges) up to and including the delivery of the goods to the final destination. The buyer is responsible to pay only the import duty/taxes/customs costs. The buyer also is responsible to unload the goods from the vehicle at the final destination.
Note: The big difference between DAP and DAT is that with DAP the seller is responsible for the final leg of the journey and the buyer is responsible for the final unloading of the goods. This term applies to any mode of transport.
- DDP – Delivered Duty Paid
Definition: This term means that the seller assumes all the risks and costs of transport (export fees, carriage, insurance, and destination port charges, delivery to the final destination) and pays any import customs/duty. The buyer has only to unload the goods at the final destination.
Note: AKA the non-Incoterm “Free In Store” (FIS), DDP represents maximum responsibility for both costs and risk assumption from beginning to end to the seller. This arrangement is the opposite end of the spectrum from ExWorks (EXW) where the majority of the cost and risk assumption is on the shoulders of the buyer. This term applies to any mode of transport.
Well, that’s all folks–!
Oh dear, I’ve gone from Sesame Street to Looney Tunes.
Anyway, your comprehensive guide to the newest Incoterms 2010 is complete.
Don’t forget our Incoterms guide for quick reference is always here for you and should be much more useful now that you are familiar with the meaning of the Incoterms!